Saturday, June 25, 2011
A Quick Look at Mining
Mining is the standard way people are able to obtain Bitcoins. It is the only way that Bitcoins are able to come in to existence. Bitcoins were created to unify the global economy and be a world standard. So the obvious mission is to spread the currency worldwide. They way that this is planned to happen is people are allowed to essentially mint their own money, creating a free supply of currency. You might wonder, then why does this money have any value? It is because the rate that Bitcoins are increasing in value is so constant, that anyone who gets involved in the market should create large amounts of wealth if they invest wisely. Mining is the secret behind the reason why this new virtual economy has, and will continue to blossom. The difficulty to obtain Bitcoins will increase as more Bitcoins come into existence. This will not only control this currency from inflating, but also create a push for more powerful computing hardware as users try to mine ever faster. Mining is the force behind this bold new currency.
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The problem I see with Bitcoin mining is that it effectively creates a worldwide 'arms race' of bitcoin miners as more and more people want a piece of the action. This means the cryptological problem to solve automatically gets harder, so that Bitcoin can maintain the constant rate of one block created every 10 minutes or so. I think this is a big waste of energy... they would be far better to keep the algorithm difficulty constant, and to donate the created bitcoins to charity. This may also get rid of the problem of dodgy people exploiting botnets for the purpose of mining.
ReplyDeleteInteresting, that does seem to be the direction the trend is moving, but consider the advancement in computer hardware effect on this, as the projections seem to indicate this will be getting harder on a long term scale (charts showed dates a far away as 2045).
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